WEBTOON Entertainment Q3 Earnings Call Highlights

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Key Points

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• Q3 revenue fell 4% to $362.8 million, pressured by currency headwinds and weakness in Japan, while the net loss narrowed to $7.5 million. Advertising revenue rose 26.2%, and gross margin expanded to 25.5%.

• WEBTOON expects 9%–12% constant-currency revenue growth in Q4, with revenue of $371 million to $381 million and adjusted EBITDA of $0 million to $5 million.

• Korea revenue grew 10.8%, contrasting with an 18% decline in Japan; WEBTOON plans to invest about $63 million in Japanese content over three years and is expanding AI tools and adaptations to support growth.

WEBTOON Entertainment (NASDAQ:WBTN) reported a 4% decline in third-quarter revenue as currency headwinds and weaker results in Japan offset growth in advertising and its Korean business. The company forecast a return to double-digit revenue growth on a constant-currency basis in the fourth quarter.

Revenue was $362.8 million, within management’s guidance range of $358 million to $368 million, and rose 0.2% excluding currency movements. Net loss narrowed to $7.5 million, or $0.06 per share, from $11.1 million, or $0.09 per share, a year earlier.

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Adjusted EBITDA fell to $2.2 million from $5.1 million, which Chief Financial Officer David Lee attributed primarily to higher foreign exchange losses. Gross margin expanded to 25.5% from 21.9%, helped by lower third-party transaction fees and growth in higher-margin advertising.

Fourth-Quarter Outlook

WEBTOON expects fourth-quarter revenue of $371 million to $381 million, representing constant-currency growth of 9% to 12%. It forecast adjusted EBITDA of $0 million to $5 million.

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President Yongsoo Kim said the outlook reflects expected continued strength in Korean paid content and advertising, a narrower year-over-year decline in Japanese paid content, and revenue from IP adaptations, including some shifted from the third quarter.

Kim said the anticipated double-digit growth excludes gaming revenue from RI Games Holdings, which WEBTOON will begin consolidating in the fourth quarter following its acquisition. Lee later said a “very small portion” of RI Games revenue was included in guidance, but that it was not driving the projected growth.

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Lee said advertising growth and a greater mix of paid content outside Korea could support gross margin over time, while the company continues to invest in marketing in Japan and other markets.